Pricing policy: Impact of increases in fuel prices on consumption

Abstract

This study addresses energy prices policy in the domestic market with the impact of higher fuel prices on consumption. In this context, we treated six main axes, the first approached the structure of fuel prices in Algeria by specifying the shares which comes back to the raw material (inputs) the remuneration of the industry and the taxes (income from the State), for the second axis we tackled the evolution of fuel consumption during the period 2010-2016, with a detailed analysis on the products that drive consumption up. In the third axis, the problem of implicit fuel subsidies was developed, through which we determined the value of total subsidies for energy products. Through the fourth axis, we tried to assess the sensitivity of demand to prices to determine the factors that contributed to the variation in consumption. Finally, the fifth axis, addressed the impact of the increase in prices on consumption, via an analysis of the factors impacting fuel demand, namely price increases, economic growth and the import of new vehicles.